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Posted on August 6, 2009 |

By JOHN FLOWERS
MIDDLEBURY — Citing growing costs and bureaucratic delays, the Holm family has scuttled plans to reintroduce a small-scale hydroelectric power project to the Otter Creek Falls in downtown Middlebury.

Anders Holm confirmed on Monday that his family had just been quoted a price of $1.7 million for the water turbine that would have been the cornerstone of a project that would have produced an estimated 5 million kilowatt hours of electricity per year. Holm planned to market that power to area homes, businesses and the town of Middlebury.

But that turbine price is $500,000 more than the family had been quoted two years ago. The turbine would have harnessed electricity from the creek as it flows through a flume under a building (owned by the Holms) that borders the south side of the Otter Creek Falls.

“Demand for these turbines has gone up tremendously,” Holm explained. “Other towns around the world are realizing this is a very good idea.”

Adding increases in excavation, materials and other work and the total project estimate has now mushroomed to $5.2 million from $3.2 million in 2007, according to Holm.

“This project has transformed from an adrenaline rush to fiscal suicide,” Holm said. “No one is going to take on that amount of risk. These delays have increased costs to the point where it is obvious we can’t proceed.”

The delays, he said, relate to a cumbersome permitting process and a difficulty in getting on the same page as the town of Middlebury, which owns water rights the Holms would have to acquire in order to proceed with the project.

The differences between the Holms and the town became fully apparent around two weeks ago, during a project pre-conference hearing convened by the Vermont Public Service Board (PSB). The PSB must award the project a “certificate of public good” before it can proceed.

Representing the town’s interests at that conference was attorney Gerald Tarrant. Middlebury has, among other things, requested assurances that the project will be done in a way that both preserves the beauty of the Otter Creek Falls and provides compensation for the town for the water rights it must grant to make the hydro operation feasible.

The Holm family thought it had resolved most of the town’s concerns prior to last month’s pre-conference hearing, but learned there that wasn’t the case.

“I had assured the state that our town issues were well in hand, to the point where we could start to proceed,” Holm said. “Unfortunately, the town’s attorney showed up and basically dropped several bombs, that water rights were still an issue, aesthetics were still an issue, and there were several issues on the town level that were not sufficiently resolved, as far as the town was concerned.”

Consequently, according to Holm, the PSB did not award the project $250,000 in planning money, as the Holms had hoped, and served notice that it would likely be October, at the earliest, before the plan could be revisited.

“That was obviously extremely disappointing to myself and my counsel, because we went to the hearing thinking we were going to get the (planning) money so we could do our studies over the summer,” Holm said. “That made it quite clear to me that this water rights issue, based on this deed from 1870, was going to hinder up to the point where we just can’t proceed.”

Holm pointed to a draft contract dating back to 1983 through which the town had agreed to sell its water rights interests in the same spot for $1,000 to Central Vermont Public Service Corp. (CVPS), which at then time had been looking at establishing a hydroelectric operation.

The Holms said they had been willing to pay the town a percentage of revenues for each kilowatt hour generated by the water turbine, though specific financial terms were never pitched to the Middlebury selectboard.

“Obviously, we have worked extremely hard and spent a lot of money,” Holm said, citing the figure of $500,000 his family has sunk into the project thus far.

Meanwhile, the town of Middlebury has paid around $25,000 to various engineering and legal firms to represent the community’s interests in the hydro proposal.

Town officials said they are disappointed the Holms have decided to abandon the hydro plan.

“The town has been a serious supporter of the concept here, with the hope that it would go forward,” said Middlebury selectboard chairman John Tenny. “We would all be better off if it were able to happen.”

Middlebury officials said the impasse with the Holms was not primarily about water rights, but rather by concerns over Otter Creek Falls aesthetics and having a reliable, solvent project that would run smoothly for many years.

“We were more concerned about getting the other pieces of the agreement,” Tenny said.

Middlebury Town Manager Bill Finger said selectmen were acting on behalf of the long-term interests of town residents.

“As far as we’re concerned, the selectboard has done what would be necessary and prudent on behalf of the taxpayers … to make sure that the project goes forward in a way that is favorable to the town and its residents,” Finger said. “In no way did we ever intend to block, stall, or make it take longer than it should.”

Ultimately, town voters would have been asked to weigh in on the project.

Holm said he does not foresee the project being resurrected — unless there are some radical changes in how small hydro proposals are permitted and financed.

“It’s not a decision we make lightly, but we have to be fiscally responsible,” Holm said. “Even if they gave us everything for free at this point … the other costs have gone up so much that we are going to have to wait until costs come down — which may never happen, at least in my lifetime.”